Capital Allocation Optimization

Annual rates of ROIC are positively correlated with above-market rates of return, suggesting companies that allocate their capital to profitable investments also achieve superior stock performance.

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Optimizing Capital Allocation with a Long-Term Perspective

The true mark of a great company is sustained value creation and jointly, the proven ability to weather difficult financial markets. Long-term investors understand that companies that are good stewards of their capital and are efficient in the way they operate represent the best investments. In today’s environment, CEOs and boards face increasing pressure from shareholders to more efficiently run their businesses and enhance capital returns. It is therefore necessary for companies to have a solid grasp on how to prudently allocate their capital for both the short-term and long-term well-being of shareholders.

Teneo provides ongoing advice on how to most optimally spend, generate, and preserve capital. Teneo is able to assist companies by analyzing their current investment strategy and finding ways to maximize long-term shareholder returns by providing unbiased, highly-informed financial advice from the point of view of an educated value investor. Utilizing deep-dive, 360-degree fundamental analysis, we arm senior executives with informed ways to enhance shareholder value, manage downside risk, and preempt shareholder activism.

Investment Thesis

Unlocking Value

Long-Term Investing

Activism Preparedness

Teneo helps management teams define their firm’s long-term business strategy and investment thesis. We approach each client as if we were informed owners of the company, performing bottom-up, deep-dive financial analysis using all publicly available information to ensure we thoroughly understand the critical aspects and competitive nature of the business. This allows our team to assist our clients in better defining their long-term investment thesis, which we then help to weave into the company’s corporate narrative.

Teneo 360 helps clients to uncover overlooked or untapped shareholder value. Through our bottom-up valuation of each separate business segment within a company, we help determine if the fair value of each business is reflected in the company’s share price. If a business segment is undervalued, our team works with the client to determine the root cause for the lagging valuation so we may assist in better articulating the contribution of this business to the whole. Finally, should our joint analysis determine that a business segment might achieve a higher valuation outside of the company’s umbrella, we work with the client to explore all available strategic options (divestiture, spin-off, etc.) and evaluate their respective impact on the company’s shares and risk profile.

Teneo helps CEOs and their leadership teams to become better investors of their company’s capital. We work with companies to evaluate the return on invested capital, including acquisitions, capital expenditure and share repurchases, to determine if the company is making the best use of its capital. Based on our analysis, we establish a go-forward framework for making such investments that maximizes internal rate of return and enterprise value.

Teneo’s experts assist clients to evaluate their preparedness regarding potential shareholder activist engagement. In parallel with our deep dive operational and financial analysis, we scope out all the potential vulnerabilities of the company through the lens of an activist investor. Our team works with the client to assess each vulnerability in order to provide well-articulated, preemptive defenses and rebuttals to each vulnerability to be used on-demand should the need arise. We also advise and manage clients through live activist situations, developing an activist playbook and robust communications plan.